Retirement can be incredibly costly. The average U.S. worker expects to need around $1.8 million to retire comfortably, according to a 2024 survey from Charles Schwab.
While there's no silver bullet when it comes to building a strong nest egg, there are strategies that can make it a little easier. And there's one move, in particular, that can seriously boost your savings with next to no effort on your part: Take full advantage of employer matching 401(k) contributions.
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The simplest way to supercharge your savings
Not all 401(k) plans offer a company match, but if yours does, it's wise to take full advantage of it. With this perk, your employer will match your 401(k) contributions -- usually up to a certain percentage of your salary. In other words, you can instantly double your savings while barely lifting a finger.
Matching contributions could boost your savings by tens or even hundreds of thousands of dollars over time. For example, say you're earning $60,000 per year and your employer will match 50% of your contributions up to 6% of your salary -- which is the most common type of match, according to a 2024 report from Vanguard. This would add up to $1,800 per year in contributions from your employer.
Let's also say that you're earning a modest 8% average annual rate of return on your investments. At that rate, here's approximately how that $1,800 per year would add up over time:
| Number of Years | Total Savings |
|---|---|
| 20 | $82,000 |
| 25 | $132,000 |
| 30 | $204,000 |
| 35 | $310,000 |
| 40 | $466,000 |
Data source: Author's calculations via investor.gov.
Keep in mind, too, that these calculations only account for the employer match itself. Once you factor in your own contributions, you'll have at least double these figures.
Employer matching 401(k) contributions can instantly double your savings, making it far easier to build a robust nest egg. By taking full advantage of this perk, you'll be on your way to a more financially secure retirement.
The $22,924 Social Security bonus most retirees completely overlook
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